3 ways it pays to network for your entrepreneurial women clients

As a former private banker turned fintech entrepreneur, I’ve been on both sides of the table — on one end advising clients starting new ventures and on the other as the entrepreneur asking, “How can I get the capital to make this work?”

I often speak with women startup founders and CEOs who have great ideas and companies and yet are struggling or on the brink of failure due to lack of access to capital to scale. One of the biggest common denominators of this dilemma is that many women entrepreneurs don’t have a large enough network of the right people who are willing to connect them to potential investors. It’s no secret that having a strong network in the venture capital space plays a critical role in securing funding for any entrepreneur. 

​​But in an industry that is overwhelmingly male-dominated on both sides — approximately 90% of VC decision makers are male, according to Harvard Business Review, and  85% to 90% of VC funding goes to male founders, according to PitchBook  — women entrepreneurs are at a huge disadvantage right off the bat. 

So what’s the answer to helping bridge the gap? The answer is financial advisors — fantastic “people persons” who have some of the best networks out there. Although my startup is rapidly growing now, it would never have gotten off the ground had it not been for the network of investors and mentors I built during my career as an advisor. 

That’s why I encourage all advisors to look through your portfolio of clients. Chances are, you have potential investors for women entrepreneurs. Even if your clients aren’t formally in the venture capital space, they may know someone who is in a position to become an angel investor. Alternatively, one of your retired clients might like to invest some of their time by serving as a mentor or resource to a woman entrepreneur. A mentor’s breadth of business knowledge and experience can often be just as valuable as a monetary investment to a new entrepreneur.

Practice and client management

Woman-owned IBD changes name as firm’s footprint grows

April 22, 2022 1:56 PM

Here are three reasons why advisors supporting women entrepreneurs just makes sense.

To give your clients’ portfolios an edge 
Research by Boston Consulting Group found that women-owned companies generated 10% higher cumulative revenue over a five-year period than startups founded by men. The same study showed that for every dollar of funding, women-owned startups generated twice as much revenue with 78 cents to every dollar, as opposed to startups founded by men, which generated just 31 cents. Women-owned startups also provide an excellent source of diversification for your clients’ portfolios. Entrepreneurial women are 1.17 times more likely than men to found a business that doubles as a social venture, providing an excellent opportunity for your clients to gain valuable ESG exposure. 

To grow your own business  
Women entrepreneurs need ongoing financial advice to succeed, whether they’re just getting started, running and growing their own business or looking to exit — and who better to discuss money matters than with their financial advisor? Being an early-stage entrepreneur also comes with the label “self-employed,” so in addition to the need to raise capital, entrepreneurs will often have other personal financial issues, such as not having a steady income and having to set up their own benefits. Helping your client succeed not only means potential massive liquidity for her, but also garnering the loyalty of a significant client — and women clients are 25-30% more likely to make referrals than a male client. 

To support economic recovery while helping women achieve parity  
Although 2021 was a record-breaking year for the amount of venture capital funding raised for women entrepreneurs, there was actually a substantial drop in the total share of venture capital funding for women-led startups. According to the PitchBook US Female Founders Dashboard, funding to women-led startups decreased from 2.6% to 2.1% from 2019 to 2020, and then decreased again to only 2% of total funding in 2021. It’s a trend exacerbated by women’s careers having been disproportionately impacted by the pandemic. 

But as we collectively reacclimate to a (hopefully) post-pandemic world, women are starting their own businesses in droves. Fundera has found that in the United States alone, women are starting 1,821 new businesses every day. Many women don’t want to go back to work in the same pre-pandemic capacity. They want the flexibility to be their own boss and to build a company they are passionate about. 

Ultimately, this means that women are going to play a crucial role in the economic recovery as they re-enter the workforce. Supporting the growth of women entrepreneurs means more growth for our local, state and national economies.